one note. if your XP came preisntalled on the PC and you change the harddisk your licence will be invalid as the OS you have is most likely an OEM copy - it may or may not let you reinstall it on different hardware but doing so would be illegal

the good news is that if you buy a new hard disk and order the a new XP OEM with it off of a microsoft partner (in the uk i have used noavtech before - there XP Home OEM is 49.99)

This looks interesting.

Regarding the legality of hardware change....
(copy/paste from http://www.microsoft.com/piracy/activation_faq.mspx)

Can hardware components be changed and upgraded?


Product Activation is able to tolerate a certain degree of change in a hardware configuration by allowing a current hash value to have a degree of difference from the hash value that was originally activated. As a result, users can change their hardware without the product believing it is on a different PC than the one it was activated on. If the user completely overhauls the hardware making substantial hardware changes (even over long periods of time), reactivation may be required. In that case, users may need to contact to contact a Microsoft customer service representative by telephone to reactivate.

cards and ram and slave hdds and cdrom are ok but if you cahnge the CPU or motherboard or install windows to another HDD it wont work (i know this through experience)